s that a whiff of deflation in the air? After years of jacking up management fees, there is a first report of a fund firm not located in Valley Forge competing explicitly on cost. Trust Company of the West
(TCW) is lowering the management fees on its flagship bond fund.
TCW has built its reputation as a premier fixed income manager serving institutional investors -- primarily foundations, endowments and pension plans. That is also the traditional market served by Pimco. However, in the past three years Pimco has leveraged the track record of its Total Return fund and the prominence of portfolio manager William Gross to make a strong push into retail. The Pimco Total Return fund is now one of the nation's largest funds.
TCW, which is just up the Pacific Coast Highway from Gross' office at Pimco, may be trying to capture some of those assets. Last month the firm dropped the minimum investment on a number of its funds to just $2,000 from $25,000 as part of an effort to capture "infomediary" distribution through fund raters such as Morningstar, Lipper and Standard & Poor's.
Yesterday the firm took the effort a step further by cutting the investment management fee on its Total Return fund to 44 basis points from 69 bps. Pimco, meanwhile, charges 75 basis points for its Total Return fund. Both firms will likely be watching investors to see if they notice the difference.
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